code favors debt over equity financing by allowing corporations a 本文来自辣%文&论@文^网原文请找腾讯752018766
deduction for interest payments but not for dividend payments. That
discontinuity has spurred companies to design complex financial
structures that have many features of equity but are treated as debt
for tax purposes.
Another problem are the narrow benefits carved into the tax code
by Congress. A classic example was recently reported by theNew
York Times(Johnston 2003: C1). Decades ago, Congress carved out a
tax exemption for small insurance companies—those with less than
$350,000 in premiums—to help farmers and others get coverage. The
Timesreports that a host of millionaires and noninsurance companies
have seized the opportunity to set up insurance company shells that
do little actual insurance business. Instead, these tax avoiders transfer
billions of dollars of assets to these shells to generate tax-free earn
ings—all legally.
If the tax code were instead built on a neutral and transparent base,
it would make administration and compliance easier for taxpayers and
the government. It would also reduce tax inequalities between com
panies, which is one cause of corporate tax sheltering. As the Treasury
Department noted, effective tax rates are“viewed as a performance
measure, separate from after-tax profits. That has put pressure on
corporate financial officers to generate tax savings through shelters”
(U. S. Treasury 1999: 28). That problem would be reduced if effective
tax rates were similar across companies and industries.
High Rate Exacerbates All Corporate Tax Problems
Corporate income tax rates are tumbling across nations in the Or
ganization for Economic Cooperation and Development. The average
top rate in the OECD fell from 37.6 percent in 1996 to just 30.8
percent by 2003 (KPMG 2003). That compares with a 40 percent rate
in the United States, including the 35 percent federal rate and an
average 5 percent state rate. The United States now has the second
highest statutory corporate tax rate in the OECD next to Japan.
Countries are realizing that high corporate tax rates discourage
inflows of foreign investment and encourage domestic companies to
invest abroad. As world direct investment flows soared from about
$200 billion to $1.3 trillion annually during the 1990s, countries have
sought to attract their share of investments in automobile factories,
computer chip plants, and other facilities (Edwards and de Rugy
2002). Extensive empirical research has concluded that tax rates are
important in channeling these cross-border investments (Hines
2001). As just one current example, the world’s third largest memory
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